Debt, hierarchy, and the modern university

by Chris Bertram on March 9, 2012

David Graeber’s three social principles – hierarchy, exchange and communism – are useful devices to think about the world, particularly when you become sensitized to the way in which one can turn into or mask another. One site of human interaction that may be illuminated by Graeber’s principles is the modern university: perhaps especially the British version which has evolved from nominally democratic modes of governance to extremely hierarchical ones within a generation.
When I started my career, institutions were funded by a block grant from government, which they were largely free to do with as they wished, and departments often functioned (with disciplinary variations) according to a combination of exchange and communism: there was a rough division of tasks and some tally was kept of who was doing what, but not so precisely as to consititute a real market. If you did extra one year, you might hope to cash in your credit next year, but you couldn’t claim it as a matter of entitlement. This system had only recently succeeded a very hierarchical one in which a single patriarch was “the Professor” and could tell everyone else what to do and exempt himself from teaching undergraduates. The formerly hierarchical system was, however, democratic further up the ladder, since the patriarchal professoriate essentially ran the universities.

The democratic period after the fall of the patriarchs, although now looked back on by those who see universities as, ideally, “communities of scholars” turns out to have been only a brief interregnum. In the UK, we moved to an increasing conditionalization of funding (the taxpayer expects something in exchange for the money), a system of hierarchically-imposed production targets (the various research assessment exercises) and market competition among universities for academic “talent”. These talented souls bought in at a great price could then (at least for a time) dictate personal terms that undermined departmental communism. So it goes.

The increased conditionalization of funding has also given power to a management layer (the elite vice chancellors and their teams) who can mediate with the funders (government and industry) and need to force their employees to meet the production targets and whatever other desiderata flow from the realities of funding, realities that these managers also create through doing things like lobbying for student fees (or sitting on the Browne Review). Democratic structures of university governance are an obstacle to “efficient management” – a “luxury” “we” can’t afford – and, anyway, they tend to fall into disuse as now time-pressured academics cease to attend. (Incidentally, academic contribution to the wider society also falls away as people are increasingly focused on their narrow research and haven’t time for other stuff.)

Internally to the universities, pseudo-market accounting mechanisms are widely applied to departments (or larger units) now conceived of as cost-centres. Many of these units are permanently in debt, debts that they have no realistic prospect of ever discharging. Since they are in debt, they are in no position to argue with or resist the demands of senior management presented as requirement of market rationality: exchange begets hierarchy via debt again. Creditor departments (often the STEM subjects) regard themselves as (a) virtuous and (b) hard-done-by, as they too are being overworked, but think that this is largely to subsidize the lazy humanities and social sciences. With virtuous creditors set against sinful debtors (“Germans” versus “Greeks”) no basis exists for cross-institutional grassroots co-operation, for democracy or, indeed, communism. Which suits the managers nicely. They, in turn, as the essential mediators with the “real world” are much in demand, or so they claim, and deserve to be rewarded according to “market principles”.

Of course, it is tempting to get all indignant about this and to wish for the restoration of the more democratic and communistic elements of academia (and I often do). But it is important to note that this transformation has not largely occurred as the result of a power-grab by bad people, but, often, as the result of incremental application of the seemingly irresistible demands of rationality. There’s a Foucauldian story here too. It seemed reasonable for government to demand some kind of accountability for taxpayer funding, and accountability brings with it systems of accounting. Suspicions of cronyism and unfairness during the “democratic interregnum”, coupled with memories of the patriarchal era, brought with them demands for comparability, standards, transparency and so forth: standards needed consistent application. Complaints of administrative overburdening of academics brought forth specialist administrative teams and “efficiencies of scale” (which were often less efficient in practice, but the leakage of power had happened) and, anyway, we wanted to concentrate on what we do best (not that, given targets, expectations, and vastly increased student numbers we had much choice). All did not run headlong towards their chains but many did, and for those taking the decisions the aim was usually not to institute a new kind of university but rather to solve this resource problem or that, to secure some funding, to ease someone’s burden, etc. There were many micro-decisions and a lot of them not only seemed, but actually were, quite sensible at the time they were taken, at least within the constrained perspective available to those making them.

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Creditor departments (often the STEM subjects) regard themselves as (a) virtuous and (b) hard-done-by, as they too are being overworked, but think that this is largely to subsidize the lazy humanities and social sciences. With virtuous creditors set against sinful debtors (“Germans” versus “Greeks”)

Worth noting of course that this has about as much reality as the notion that Germans work longer hours than Greece. In any system of accounts other than the insane, I-can’t-believe-it’s-not-a-market one used by British universities, you would regard the humanities departments (which are popular and attract lots of students) as the revenue producers and the STEM departments (which not only struggle to fill lots of their courses apart from medicine, but which are constantly asking for expensive capital equipment, the cost of which is rarely even nearly covered by commercial sponsorship) as the mendicants.

That’s true and we may well see a reversal of roles in the near future (insofar as we haven’t already). Of course the real relationships can be hidden by accounting choices of various kinds (how you charge for space, equipment etc). If there is a reversal, then very short time-horizons will be relevant: soon the new creditors will be preening themselves and will have entirely forgotten their own period of sin.

… and I should add, part of the power of managements here stems from their being the authors of the internal accounting rules under which some emerge as creditors and others as debtors. The saints and sinners, Germans and Greeks, then appear in the drama as supplicants to the rule-makers.

Expanding slightly on the importance of accounting rules: different kinds of departments are not judged to be debtors or creditors in terms of the balance between their income and expenditure, but in terms of their contribution to the overall enterprise, above all to the generation of a surplus to fund capital projects. A science-heavy university will need to generate a far larger surplus than a humanities/soc sci-heavy one, because its capital projects will generally be much larger and vastly more expensive; even when the requirement to contribute to surplus is adjusted according to the ability of different types of subject to increase income (esp. indirect research costs income), non-STEM subjects in one university will thus find themselves facing significantly greater financial demands than the same subjects in another university. And I imagine there are similar pressures in the reverse situation, STEM subjects in predominantly humanities/soc sci university, which will explain the tendency for lots of Chemistry departments to be closed over the last decade or so.

What I find depressing is the extent to which this pseud0market mentality has permeated down to lower levels of the system; even within a humanities faculty, where everyone feels like Greeks compared with the engineers, there will be some departments that feel comparatively German because of their relative success in meeting financial targets, bringing in research grants etc, and who start demanding that discipline and austerity be applied to the other departments. And within these humanities departments, there are those individuals who bring in the grants and produce the 4 star research, regarding their colleagues as undermining the enterprise…

dsquared, you’re missing something fundamental about the cost structure of a university as opposed to a college. Students aren’t the funding source, grants are. In addition, science instruction can be much more efficient. A humanities instructor at the UofC, teaching 50 students all year, brings in 50,000 a year. (40,000 tuition cost divided by the 4 classes we take) in classroom revenue. A mathematics professor firstly can outsource the provision of large classes to graduate students, secondly can teach a large lecture with minimal increase in cost, and thirdly takes in grants and such that cover the more obvious costs of being a professor. This makes their take of the pie much bigger. A chemist needs to pay for chemicals, but can do so with grants, out of which the university takes a chunk. This at least is my impression about the US: the UK might be different.

A truer reflection of where the real cost burdens lie in the public university system can be found by a comparison with newly established private universities/colleges.

The latter, in my experience, are almost exclusively concerned with ‘low cost’ (in terms of buildings, equipment and capital investment) areas like business, accountancy, law, media etc. These are also areas where they can charge substantial fees. Insurance premia, for instance, for 100 undergraduates in a chemistry lab are a different proposition entirely from premia for 100 undergraduates enduring a lecture in accountancy.

I can’t think of a single recently established private university in the British Isles which offers a full suite of science and engineering courses. Or any courses in those areas, for that matter. The costs of getting these off the ground from scratch would be hugely prohibitive and would require or exceed Ivy League style fees to finance in the short to medium term.

So, I think there’s an irony there that science subjects, if provided on a purely market basis with all the costs of delivering them included in the fee charged to students, would fall off the cliff within a couple of years as those fees would be, as I said, on an Ivy League scale. For all of the preening from the self-regarding STEM ‘superstars’ (and wannabe superstars) without the state these subjects would be toast within a decade. And industry, despite demanding that STEM be prioritised, is not and will not be willing to pay higher corporation taxes to fund them.

Two points, both implied in the post reluctantly, but that I want to makes sure don’t get lost in the discussion:
1. The current state of British universities (and coming condition many in the US) is not democracy lost but democracy shifted. Faculty used to be largely free to run universities as they saw fit, but they alone were the demos. All other relevant constituencies (students, government, citizens, etc.) were excluded. Perhaps faculty knew best and should have ruled, but this was an oligarchy at best, if an internally democratic one. Now students, citizens, government, etc. have demanded their say, and are beginning to get it, if only clumsily through government mandates. But this is only a shift to a different demos, one the previous rulers will experience as a loss of democracy.

2. One reason we faculty lost our democratic oligarchy is our refusal to participate. As one of those faculty who did do a lot of governance work because I wanted to be part of a participatory workplace, I saw our failures first hand. Now that I’ve been assigned a temporary administrative/management role, I work very hard to get faculty to take their governance responsibilities seriously so I’m not forced to make decisions on my own. I find this harder than getting students to do the reading before lecture. As a result, I end up acting unilaterally, since my ostensible partners refuse to act at all. That’s their right, but this refusal to participate certainly contributes to the shift toward administrative power.

“Grants” (except in as much as they come directly from industry rather than from the overall public sector education budget) are part of the costs, not part of the revenues. This is another feature of the way that the accounting system fools people. CMK is right that if the economics followed the accounting, we’d see people willing to set up new STEM departments. (I agree with you that from a cost point of view, mathematics doesn’t really belong with STE and probably subsidises it quite a lot).

I agree with you that from a cost point of view, mathematics doesn’t really belong with STE and probably subsidises it quite a lot/i>

Hence the physicists’ joke about asking for $150 million for an upgrade to the particle accelerator and being told “Why can’t you be more like the mathematicians? All they ask for is pencils, paper and wastepaper bins! Or the philosophers! All they ask for is pencils and paper!”

“Grants” (except in as much as they come directly from industry rather than from the overall public sector education budget) are part of the costs, not part of the revenues. This is another feature of the way that the accounting system fools people.

It’s fooled me; can you unpack this a bit? If we’re looking at it from the point of view of a university deciding which bits are financially better, aren’t grants revenues wherever they come from?

If we’re looking at it from the point of view of a university deciding which bits are financially better, aren’t grants revenues wherever they come from?

It’s puzzling me, too, I have to admit.Even if you capitalised the grants into fixed assets, say, the lower NBV to depreciate would improve your bottom line as you’d get less depreciation each year, surely?

More to the point, as of 2012/13 there are no grants. The income source is money loaned to students by the government (under repayment terms that make it look a bit like a lifelong graduate tax only not really). From the students’ point of view, they’re paying for their education; they’re the customer, and you know what they say about the customer.

I think Neville identifies the core dynamic – competition between academics for funding (and merit badges) doled out by professional managers on behalf of the government.

A mathematics professor firstly can outsource the provision of large classes to graduate students

What makes you think this isn’t possible (and routine) in the humanities?

Wattson @5 A humanities instructor at the UofC, teaching 50 students all year, brings in 50,000 a year. (40,000 tuition cost divided by the 4 classes we take) in classroom revenue.

That $50k figure only sounds low because you’re short a zero, it should be $500,000. Which would be a windfall, but then that’s at 40k/year tuition, I wonder how many students pay that much? And what about state schools where the tuition, even if you factor in a large state govt subsidy, is much lower? I’m curious about this, clearly most of the tuition dollars in the humanities aren’t going to professor salaries. Generally, our only ‘equipment’ costs are libraries, but that has to add up too…

part of the power of managements here stems from their being the authors of the internal accounting rules

This is very true. At my previous institution the administration was in the habit of telling everyone that they were the reason the budget wasn’t balanced and that they were being subsidized be all the other programs.

It is a fair point to raise. But the reality is not an expansion of the demos (a move from local workers’s co-op to democratic socialism as it were) but a centralization of control coupled with reference to the interests of ideologically-selected “stakeholders” (chiefly employers).

It’s fooled me; can you unpack this a bit? If we’re looking at it from the point of view of a university deciding which bits are financially better, aren’t grants revenues wherever they come from?

My point is that the underlying economics are that STE departments don’t come anywhere near covering their costs by revenues generated from people paying for their services (undergraduates and industry), and so are always in need of a payment to make up the deficit, which is the role of grants. It’s very much a presentational choice whether you’re going to treat these grants as if they were “revenue” (portraying the STE as Germans who generate their own income) or “subsidy” (which has them as Greeks). If you take the individual university as your business unit, then the payments look like revenue; if you look at the whole Department of Education budget as your unit, they look hella Greek. I would argue that, since the STEM departments aren’t generally forced to close down if they fail to win grants, it’s more like a subsidy. So I would say that they’re not really Germans; at best they’re French (ie, they look and act like they’re virtuous and paying their own way, but they have a long history of being net recipients due to institutional arrangements that nobody wants to question).

Humanities and social sciences departments seem to be more than capable of covering their direct costs with direct revenues from undergraduates (but they are selling intangible services rather than making Big Manly Things, so we should probably call them Britons instead of Germans), and it takes quite an effort in terms of the kind of things Chris mentions in #2 to turn them into Greeks.

But the reality is not an expansion of the demos but a centralization of control

But this seems to be very frequently the case. Whether you are looking at universities, or at public schools[1], or at environmental policy–the effect of having a larger demos is regularly that managers/bureaucrats are more important and more influential.

1)Public schools in the US–the dramatic change over the last 50 years from local school boards being pretty much entirely in control to national law heavily affecting almost all the relevant decisions.
(If this is a derail, please just say so.)

This whole privatization business seems to me to be largely humbug. If we really believe that private, capitalist enterprise is the only thing which generates honest-to-God real revenue — and therefore value — then politically speaking, that makes the rest of us supplicants, full stop. We’re not even allowed to discuss what part Tim Berners-Lee played in making Google an economic powerhouse, let alone explain why we should pay for training bright young things to play the violin.

Didn’t at least some of us once believe that money isn’t the measure of all value, even when, generally speaking, we needed a lot of it to do things which were largely indefensible on a cash-and-carry basis?

I agree with you that from a cost point of view, mathematics doesn’t really belong with STE and probably subsidises it quite a lot).

And there was me thinking it must surely be the TE subsidising the SM, since they do the inventing and making of things that can be sold. If that’s completely wrong, how can SM be bringing in more cash than the humanities?

My point is that the underlying economics are that STE departments don’t come anywhere near covering their costs by revenues generated from people paying for their services (undergraduates and industry), and so are always in need of a payment to make up the deficit, which is the role of grants.

Not quite sure I see a real distinction here – whether it’s paid by undergrads, government or industry, there’s stll the expectation that it’s worth chucking money at those boffins with their smells and their eigenvectors in case they come up with something that goes bang in a new and exciting fashion, no? There’s a reciprocity of expectations there that’d shift it, were I analysing this from a tax perspective, into a trading transaction.

I confess I was primarily thinking of research grants as distributed via the research councils in the UK.

Oh. Never mind. I am (a) a maroon and (b) out of practice at even remembering the research councils exist.

What dsquared said, and also FEC, say I. Nobody pays full costs – my former HoD said once that sub-FEC awards should be balanced out with awards from funders who pay over 100% FEC, but he never got round to telling us who those generous people were. Since every grant that comes in displaces its own top-line value in personnel costs, and since the centre isn’t actually getting the top-line value,
every grant gained is a net cost to the University. A ‘teaching university’ that gave up on research altogether would actually be in a much healthier position financially, as long as it had some other way of maintaining some measure of academic snob value. And below a certain level of research excellence it’s debatable how much difference one more notch up the research league table makes to potential students – hence the big shift to buzzwords like ‘employability’ and ‘student experience’.

There’s a reciprocity of expectations there that’d shift it, were I analysing this from a tax perspective, into a trading transaction.

I would argue back viciously and violently with the Commissioners on that one. There’s no quid pro quo there – the boffins don’t get more money if they come up with something useful and can go for very long periods without delivering the goods and never get tinned. And the person spending the money has very little link-up to the benefits from any valuable stuff produced. If you compare it to, say, private sector pharmaceuticals research (where, frex, Pfizer basically built a research facility around one guy as his reward for inventing Viagra), then it looks much more like a charitable donation.

btw, I have just been told in email that the M in STEM is “medicine” not mathematics.

“But the reality is not an expansion of the demos but a centralization of control “

I’m not sure what this means. Nearly any expansion of the demos means that the demos is more diffuse and the chances of any one member of the demos being intensely committed to your cause is lower. This invokes all sorts of public choice problems that normally get brushed away around here as “too libertarian”. But in any case, of course it seems like ‘centralization of control’ to the people who used to be in charge. Instead of making your own decisions, you have to deal with the rest of the larger democratic structure. The larger democratic structure ends up (just as it does nearly everywhere) being either market like in how it influences you [but not under your control] or controlled by a bureaucratic hierarchy [and under the control of people who game bureaucratic hierarchies well]. Or worse I suppose, both.

But that is still a real shift in the expansion of the democratic locus. The problem is that the democratic system has imposed an annoying bureaucracy on you. And you suggest that the annoying bureaucracy is inefficient, and perhaps counterproductive.

A chemist needs to pay for chemicals, but can do so with grants, out of which the university takes a chunk. This at least is my impression about the US:

I happen to have some experience in grants administration, and this isn’t really quite true. Research loses money. It’s a great, miraculous year if you can break even. Research requires labs, which have to be remodeled at least semi-regularly. Research requires shared equipment that’s too big to get via grant (if you’re lucky you can get a grant that covers much of the cost provided that the school kicks down a big chunk). Research inevitably means subsidizing health care and tuition and so on for grad students and postdocs who work in the labs – no one ever funds their entire lab via grants. Research also requires research support – grants administration to make sure that the spending is in line with the sponsor rules, to pay the invoices, to create the grant budgets and paperwork that faculty alternately can’t and won’t prepare themselves, to create contracts when industry or subcontract work is involved, and of course to create the virtually infinite series of reports on funding to departments, colleges, the state and the federal government. Research loses money. Research is still awesome, though.

How long before the market mania burns itself out and is regarded as another quaint ideological relic? Our great leap backward, commoditizing and pricing things that never should be subjected to this “discipline,” has left America a pinched, angry, and spiritually depleted nation. The magic of the marketplace has transformed the requisites of a decent life (freedom from disease, crime, and ignorance) into “luxuries” that are increasingly unaffordable for most Americans. And what is the remedy proposed for our decline? More market incentives!

I would strongly second ECW’s point @7 – UK institutions have always been oligarchic and remain so, but the membership of the oligarchy has changed (somewhat) and relations between the oligarchs have changed (perhaps more significantly). The ‘new’ oligarchy has a lot more women in it, for instance, but it remains very white and middle-class.

On the STEM/humanities issue, I think it is helpful to distinguish between the role of revenue (and particularly research income) in establishing social prestige, and the actual practical business of earning enough money to pay the bills. Those of us shaven-headed university administrators who wish only to pay the bills prefer the arts and humanities (especially the creative and performing arts) where there is strong student demand and little research income. Research grants (from research councils and other sources) usually bring more cost into the organisation than revenue, so from a financial perspective the less one has of this the better. Vice-chancellors don’t so often see it that way, and so they will often dissipate the QR funding (which could genuinely be worth having) in attempts to increase the loss we make on research grants because of their perceived prestige value.

This, I think, confirms Chris’ broader point that the language of market rationality may be used, but the rational market itself is absent.

Waston Ladd: “A humanities instructor at the UofC, teaching 50 students all year, brings in 50,000 a year. (40,000 tuition cost divided by the 4 classes we take) in classroom revenue. A mathematics professor firstly can outsource the provision of large classes to graduate students, secondly can teach a large lecture with minimal increase in cost, and thirdly takes in grants and such that cover the more obvious costs of being a professor. This makes their take of the pie much bigger.”

Um, it works the same way in the humanities. You must have had some good humanities classes; most students end up well aware that those classes can be taught by TA’s, with the Big Guy lecturing three hours/week.

The structural issues are very nation-specific. In the US, for example, students are required to take a broad set of courses outside of their major subject. Everyone has to take some science, writing, math, foreign languages, and so on. (If you/re a biology major you don’t have to take a biology survey course, but everyone else does.) In a university like mine this will be about 1/2 of the total number of classes that they take in total. This leads to a completely different set of incentives from that of a university system where you specialize immediately on entry.

The sciences are supported by a combination of tuition (largely from the intro classes) and grant money; grants act largely to defray fixed costs for laboratories, etc. and to reduce teaching loads. Large lecture classes are the cheapest thing from the point of view of costs. Small, labor-intensive classes (such as writing, languages, or graduate instruction) are the most expensive.

My experience is that management wants “accomplishments”, and that STE (not so much M) give them what they want. The English department functions pretty much like it did 100 years ago, except that the staff have been disabused of the notion that they have rights. Calculus classes haven’t changed much either. But opening a new research facility gives management a feeling of measurable progress, and feelings of measurable progress are what management likes. This is also why management likes sports; opening a new rock-climbing wall or jai-alai court gives everybody something to brag about on their annual reviews.

Nobody wants to be the guy who goes to his annual review saying “I taught another 200 kids about Hamlet, and I’ll teach 200 more every semester until I die”. That guy is career limited.

“Large lecture classes are the cheapest thing from the point of view of costs.”

From the very narrow point of view of marginal personnel costs, which is assuming the building and its rooms already exist with the lights left on, which is a bit like calculating the relative energy efficiency of elephants and gnats by assuming away metabolism and just looking at # plows pullable per specimen. (The relative costs do change quite a bit if the building managers abandon any attempt to regulate temperature, which is a bit like deciding that gnats and elephants might as well be cold-blooded.)

Actually, I am the guy who says, “I taught 110 students about writing, and I’m going to do it every school year until I die.” I get paid shite, of course. But in Composition, I’m not rare. And since I’m dead cheap, I probably won’t be downsized.

I’ve found much of this thread confusing, because both UK and US academics are contributing, without always making it clear where they are located (hence some of the confusion about the definition of STEM subjects, which includes Maths in the UK).
The payment arrangements and incentives are different in the two countries, although the UK is becoming more like the US. In the UK there is still a Government contribution to teaching costs, but in future this will be limited to STEM subjects. If this subsidy were removed it would be difficult (because UK degrees are specialised) to avoid charging higher student fees for these subjects (the US system finds it easier to cross-subsidise science courses, because students typically take a mixture of cheap and expensive subjects)).
It might be helpful if contributors made it clear which system they are taliking about. For the record, I have recently retired from a UK university (where I taught Economics, which is not a STEM subject).